Financial Crime World

Here is the converted article in Markdown format:

Danske Bank Maintains Robust Risk Management Amid Market Volatility

Copenhagen, Denmark - Danske Bank has reported a stable and robust risk management framework in its annual report for 2023, despite ongoing market volatility.

Risk Management Practices

The bank’s risk management practices aim to ensure that it can always meet its payment obligations on an intraday basis and across market cycles. To achieve this, Danske Bank:

  • Manages liquidity and funding to maintain a sufficient distance from non-viability and limited market reliance through an adequate liquidity reserve of high-quality assets and diversification of funding sources.

Key Metrics

Key metrics, including the Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR), remained well above limits set by the Board of Directors and regulatory requirements. The bank’s:

  • LCR was 170% at the end of 2023, up from 151% in 2022.
  • NSFR was 140%, up from 120%.

Cyber Threats

The report also highlighted Danske Bank’s efforts to address cyber threats, including:

  • Enhanced security controls
  • Employee training programs implemented to strengthen first- line-of-defense non-financial risk management

Sustainability Risk Assessment

In the sustainability risk assessment, Danske Bank continued to increase its customer-based ESG risk assessments, with around 87% of business exposure in scope assessed for ESG risk. The bank also:

  • Published its Climate Action Plan, which aims to manage climate transition risk at the portfolio level and assesses the transition risk of customers with significant exposure in high-risk sectors.

Pension and Insurance Business

In its pension and insurance business, Danica Pension reported stable risks, but noted an increase in health and accident claims. The bank’s life insurance business consists of:

  • Unit-linked products
  • With-profits products
  • Other products with direct equity exposure, with market risk primarily borne by customers.

Conclusion

Overall, Danske Bank’s annual report for 2023 demonstrates its commitment to robust risk management practices, which will enable the bank to navigate ongoing market volatility and continue to serve its customers effectively.